The Federal Reserve Open Market Committee’s two-day policy meeting is underway. It is not expected to decide any change in US interest rates. Fed chairman Ben Bernanke’s staff have given him projections that the US economy will continue to slow into the second half of 2006 before picking up again next year.
The US central bank has pushed interest rates higher 17 times starting in 2004 and ending last June. Its benchmark rate is now at 5.25%. The ECB, faced with much less robust economic growth in the euro zone, has raised rates to just three and a quarter.
Everything the Fed says at the end of the two day gathering will be minutely examined by economists to see what it might do in the medium term.
Some analysts have even been predicting the policy makers might cut rates next spring. But arguing against that is the fact that there has been some hawkish rhetoric from Fed officials lately about the need to keep inflation under control.